Ghosn to share Nissan CEO duties after buying Mitsubishi stake

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Nissan Motor completed its acquisition of a US$2.3 billion stake in Mitsubishi Motors Corp, clearing the way for Carlos Ghosn to take over as chairman of a scandal-plagued partner and embark on his bid to turn around a third major carmaker.

Ghosn, already chairman and chief executive officer at Nissan and Renault, promoted chief competitive officer Hiroto Saikawa as co-CEO of Nissan. The move allows Ghosn to dedicate more time to repairing trust in Mitsubishi Motors after a months-long fuel economy scandal that may lead to the carmaker’s first annual loss in eight years.

“I know my limits,” Ghosn, 62, said Friday in an interview from Nissan’s headquarters in Yokohama, Japan. “Obviously, this move is taking into consideration short-term needs but also it is in the perspective of continuous development of our alliance.”

Nissan is coming to the rescue after Mitsubishi Motors’ admissions to improperly measuring fuel economy and manipulating test data. A push toward electrification and autonomous-driving technology is leading smaller carmakers to join with bigger rivals to share resources and save costs, exemplified by Suzuki Motor Corp’s talks to form an alliance with Toyota Motor Corp.

Mitsubishi Motors and Nissan have agreed to share plug-in hybrid and autonomous-driving technology, finance company resources and a multipurpose vehicle model for Southeast Asian markets.

With time we are going to develop much more synergy. What we see today is low-hanging fruit

Carlos Ghosn, chairman and CEO of Nissan

Mitsubishi Motors sees the alliance with Nissan leading to 25 billion yen (US$241 million) in synergies for the fiscal year ending in March, said Osamu Masuko, who will remain president while ceding the chairman role to Ghosn. Nissan estimates 60 billion yen in savings next fiscal year.

“With time we are going to develop much more synergy,” Ghosn said at a press conference Thursday. “What we see today is low-hanging fruit.”

A Renault-Nissan-Mitsubishi alliance creates the world’s fourth-largest car group, after Toyota, Volkswagen and General Motors Co. One of the first decisions Saikawa, 62, will have to make along with Ghosn will involve Nissan’s presence in the UK in the wake of Brexit. The nation’s top car assembler will determine next month whether to continuing making Qashqai sport utility vehicles at its Sunderland plant, Ghosn said.

At Mitsubishi Motors, Ghosn and three other Nissan executives will join the board of directors. Nissan chief performance officer Trevor Mann will become the chief operating officer at Mitsubishi Motors, which will also name a risk control chief.

Masuko wanted to leave his job to take responsibility for Mitsubishi Motors’ fuel economy wrongdoings, which include improper testing going as far back as 1991, according to Ghosn, who said he asked his counterpart to stay.

“Ghosn and Masuko have developed a sense of trust,” said Koji Endo, a Tokyo-based car analyst at SBI Securities. “Ghosn will need Masuko in that position to coordinate with his restructuring job. That’s better than finding a new guy that he hasn’t worked with before.”

Nissan paid 468.52 yen per share for about 34 per cent of its outstanding stock, Mitsubishi Motors said in a statement. Partnering with Nissan will boost Mitsubishi Motors’ operating profit margin by about 1 percentage point this fiscal year and at least 2 percentage points in each of the following two years, Masuko said. The company forecast a steeper loss for this fiscal year on Wednesday.

Shares of Mitsubishi Motors have slumped 48 per cent this year in Tokyo, while Nissan has declined 21 per cent. The benchmark Topix index dropped 11 per cent.

After his radical makeover of Renault beginning in the 1990s and Nissan in the early 2000s, Ghosn earned the nickname “Le Cost Killer”. Taking over as Nissan’s president, he brought the then-struggling company back from the brink by breaking up its so-called keiretsu network of suppliers, shutting plants and leveraging an alliance with Renault.

“The question is: can he wear three hats and do a good job?” said Bruno Aziere, a representative of the CFE-CGC union at Renault. “How can he have enough time to devote himself to all entities?”